As LK Bennett approaches its 35th anniversary, CEO Darren Topp explains how the event-driven womenswear brand is maintaining its niche in the UK and global markets.
In the latest interview by our regular contributor Eric Musgrave, Darren Topp, who is currently planning the schedule for LK Bennett’s 35th anniversary activities in 2025, reveals: “We are not Gucci, but we do have international appeal and that’s where our growth will come from.”.
In Wimbledon in 1990 Linda Kristin Bennett opened her first LK Bennett shop selling smart footwear that formed an accessible bridge between the designer styles (and prices) found in Bond Street and mainstream offer of high street multiples.
With her blend of glamour and comfort, she became known as the Queen of the Kitten Heel, later adding accessories and clothing to create a distinctive mix.
In 2007 Bennett sold 70% of the business to private equity firms Phoenix and Sirius, netting her £70m – £100m. A decade later she bought the company back, but within two years, in March 2019, LK Bennett entered administration.
Within a matter of weeks the business was acquired by Byland UK, owned by Rebecca Feng, the holder of the LK Bennett’s Chinese franchise, and other investors. Byland paid £9.8m for the business but did not take 31 of the company’s then-49 UK stores. Byland has run LK Bennett globally since April 2019.
Five more stores were lost and other leases renegotiated in a CVA (Company Voluntary Arrangement) in November 2020 during the pandemic.
Darren Topp was persuaded to return to the firm by Feng. He had held the CEO role between 2016 and 2018, preparing LK Bennett for sale by its private equity owners and working alongside Linda Bennett after she bought back her creation. He worked out the China franchise deal with Feng in 2016.
An affable and down-to-earth Lancastrian, Topp brings to the board room almost 40 years of retail experience. He joined Marks & Spencer straight from school as a management trainee in 1986 and spent 22 years there before putting in eight years in senior roles at Arcadia and BHS. He was CEO of BHS during the end of the Philip Green era and the controversial sale to now-disgraced Dominic Chappell.
Topp admits he caught the fashion bug at 14 years of age, as a Saturday boy selling jeans from a stall in Salford Market. He remains as passionate as ever about the industry.
What is LK Bennett’s place in the UK womenswear market today?
We are an occasionwear or event-driven British brand. Our key customers are 35 to 65, accounting for over two-thirds of our sales. We’re about Britishness and British design, which makes us interesting internationally.
Lots of descriptions could apply, like unique, sexy, interesting, different and elegant. We call what we do accessible luxury because basically we have the quality and design of luxury products but at significantly lower prices. For example, we often source our shoes and boots from Italian factories used by lots of big brands.
We still follow Linda Bennett’s original concept to be between high street and designer brands. But there is sometimes a confusion. We are not trying to be a luxury brand. We’re a high street brand, but we are the top end of that market.
We are providers of a special treat because the bottom line is, for many people, our products are expensive. There are a chunk of customers who can afford them but many save up to buy from us for a special occasion.
The result is we are a very London-centric brand. The further you go from London, generally, the harder it is for us to find customers. So outside London we are found in predictable places like Harrogate, Chester, Cheltenham…
LK Bennett AW24
Has the UK fashion sector recovered from the pandemic?
No. I’m not sure if we know what “business as usual” looks like anymore. I’m not sure we’ll ever know. That’s one of the challenges facing anyone running a fashion business in the UK. Let’s be honest, LK Bennett 100% survived the pandemic primarily because of government support. Without it, we would not be here. We’re very grateful.
We got a big bounce straight after Covid. There was the pent-up demand for parties and weddings, so people came out and spent. It wasn’t the case for everyone, of course, but generally people who’d been working had not been spending, so they were relatively flush.
We had our best year for a decade. Then, as strong as 2022 was, 2023 was as bad. It just fell off a cliff. We had been sensible. We didn’t hire lots of extra people because we didn’t believe the growth would continue, but we didn’t anticipate the severity of the decline. The result is we will post a loss for 2023-24 after almost £3m profit the year before. That’s the rollercoaster we are still riding.
Since then, frankly, we’ve had everything against us. Brexit, Ukraine, the Middle East, rioting in our streets, which put people off going to the high street and deterred international tourists.
Of those, Brexit is giving us both costs and headaches, mainly from paperwork. Many of us have bonded warehouses for transporting and reorganising stock, but it restricts the stock that’s available.
I am not sure it is going to improve. I can’t see why the European Union would help us with it. We played our card. We can’t have all the good bits only.
And then there’s been inflation! I’m 57 and I don’t remember inflation like we’ve had recently. The vast majority of consumers have only known low interest rates, low inflation and suddenly all that gurgled up become a real problem.
Additionally, we’ve got specific challenges in the UK around, for example, the end of tax-free shopping, which is a problem for us. I’m not saying it’s right or wrong, it’s just another change. Then there are perennial challenges of the cost base. When you’re a small company like us, even tiny movements in those fixed costs make a significant difference to the bottom line.
Look at the minimum wage. Would I want to live on £11.51 an hour? No, I wouldn’t. We pay more than the minimum wage and we 100% want to pay people more money, but every time the minimum wage is lifted by a pound, the person who’s on an additional two pounds an hour also wants more. The cascade effect is quite significant. The reality is, in this very competitive market, you just can’t pass all that on. And I say that being in a sector where I’m selling dresses for £345 to £500, not £10 T-shirts.
So increases in wages, holiday pay, maternity pay, paternity pay, sick pay and so on are tricky. All are perfectly good things to be doing, but they all have a financial impact on the business. That’s the challenge.
What other external pressures concern you?
Business rates are clearly significant. If I look at any of our stores, my rates bill is often more than my staffing bill by some margin. But let’s not hold your breath for any significant reform of the system. Whatever complexion of government, they look at the many billions of revenue from retail business rates and think, that’s a big hole to fill. It ain’t gonna change. I just don’t see happening.
In our London flagship at 95-96 New Bond Street, with 2,000sq ft of trading space, our business rates are over£300.000. That’s six grand a week – before the rent – just to trade. When I left Marks and Spencer in 2008, you could broadly say business rates were somewhere between 20% and 30% of the rent. Now it’s more likely to be 80% of the rent. Sometimes business rates are higher than the rent. That’s the irony.
It’s one of those things I can’t do anything about it.
LK Bennett Footwear
What are the differences between the LK Bennett Rebecca Feng bought out of administration in 2019 and the business now?
Before the administration, it was a mistake to think if we take £100m in 20 stores, then if we open 100 stores, we can take £500m. It doesn’t work like that.
The further I go from London, the harder it is for me to get our prices. Among my own family in Manchester, my mother, aunties and cousins, you know, I see their eyes glazing over when I tell them a pair of LK Bennett shoes are £250. At our end of the market, consumer demand is limited. If you think you can replicate it, all you do is spread a bit of what you have, but you add a huge additional cost base.
I did the Chinese franchise agreement with Rebecca Feng in 2016 and she opened a number of stores there. When she approached me about her buying the business, I said, are you really sure because retail in the UK is not an easy gig.
I told her the UK business had to be half the size and that everything outside London that was marginal had to go.
Linda did an amazing job starting it nearly 35 years ago, but none of her competitors from those days have the same reputation today. We have lots of new competitors from the UK like ME+EM and The Fold, and there are all the ones from France like Sandro, Maje and ba&sh. For the consumer, it’s great to have such a selection, but it’s not so good when you are competing against them.
Of course, things were competitive way back in 2000, but in the past 25 years we have seen the massive rise of selling online. No one had experienced anything like it before. The market has totally changed.
Also, due to price pressure, the actual cost of clothes today is far less than it was. In the 1990s, when I worked at M&S in The Pantheon near Oxford Circus, an all-wool suit was £199. And that’s what it costs today! Almost 35 years later, it’s the same price even though everything else has gone up.
In real terms, that probably should be a £600 suit today.
Price pressure is one of the biggest challenges. We still predominantly make in Europe, using mainly natural materials, with everything designed in-house. We are at prices that, in real terms, are what Marks and Spencer should be now. The whole dynamics of the fashion industry have changed.
In the first 20 years of my career, if your product was pretty good and you got the store open, you’d know, barring a disaster, you could make money and not just a bit money. Marks and Spencer was making the thick end of 15% net profit. There are not many retailers today that make 15% net profit.
The whole online piece has completely changed that dynamic because, in some ways, it’s been a race to the bottom. Can you do it quicker, faster, cheaper? From a consumer’s view, there are a whole load of benefits around that, but there’s a whole load of downsides too. Quicker, faster, cheaper means invariably you have to compromise on production, quality of materials, how it’s made, where it’s made, what it’s made from.
If you buy a shirt for three quid, and you say to yourself, who’s getting shafted, I’ll tell you, it’s everyone – the environment, the mill that made the fabric, the person who sewed it – everyone. I’m not suggesting that anyone who buys cheap is a bad person. If you buy from the likes of Shein, that doesn’t make you a bad person, but it changes the dynamics of what everyone else is trying to do.
The internet, of course, may not be the panacea we thought it might have been five years ago. The pure plays have struggled and luxury brands are now doing their own websites, so that’s made that market more dynamic.
There have been other changes. I recently read a report from (management consultancy) Bain and Co that said by 2030 20% of the retail market will be pre-loved – or second-hand, as we called it when I was growing up!
Back then, if you had any money, you would never buy second-hand clothes. Now, type in LK Bennett on eBay and you are offered about 6,000 products. Who’d have thought someone would wear someone else’s shoes? They clearly do.
LK Bennett Petite
You’re the special event specialist yet on your website you flag up apparently niche sections like a petite range, a conscious range, a repair service, a rental service… Are these just distractions from, excuse the pun, the main event?
This is the new world. As a company you’ve got to do this stuff. Even if you don’t hit all those targets today, they are coming, so you’ve got to do it. A lot of customers expect you to and so do your employees. Mostly, it’s the right thing to do.
On petite, it’s being promoted at present because we are just in our second season with it, but we are in our fourth season on larger sizes for curvy women. Previously quite a chunk of our range would stop at 16. Now we offer everything up to 20. It’s the same product – the same design, the same material, just cut for different women.
On the sustainability piece, the reality is that making clothes is not carbon-neutral or environmentally-neutral. It’s just not. We’re all trying to get our heads around it. So repairs and rentals are a big part of it. I’m amazed how many customers like rental. It’s quite a decent business for me.
I don’t see these as distractions. This is just stuff to do with purpose.
LK Bennett Curve
What are the targets for LK Bennett over the next few years?
British brands can do really well internationally, so there’s an opportunity for us via franchises or partnerships. We are not trading in many territories, but we have got more standalone stores in China (more than 20) than we have in the UK (13). Basically, they’re buying our British design sensibility. Obviously they are not buying for the name because we are not Gucci.
A further appeal for us is the royal connection. We’re very grateful the Princess of Wales wears not just our brand, but other British brands. It matters. When she wears one of our dresses or coats, they are gone. The international markets want me to make it again, which is something we would normally never do. She’s a real icon for British retailers.
We design everything in-house and we are particularly known for our prints. British design still has a big cachet around the world. Rebecca Feng tells me Chinese customers can recognise British and European styles at 100 metres.
Also, we have potential in the UK. We will be back in Knightsbridge by late September. Many years ago we had a store there and the rent was almost £1m with rates of nearly £0.5m. We’ve got a significantly better deal now. Also in London I’d like to be in Marylebone High Street but on the right deal. Everything outside of London is more challenging, for sure.
Half our sales are online, either with our own website or through other sites. John Lewis is our biggest partner. Next is really good. We are also on selfridges.com and we have just started on marksandspencer.com, which has suddenly gone into brands.
Worthwhile as these partnerships are, of course the best pound you can take is an extra pound in your own store. It’s the most effective pound – that hasn’t changed. With online trading, as anyone will tell you, the headline number looks fantastic, but there are quite a lot of costs associated with it. I think the online proposition is going to have to change long-term.
On products, I have resisted every temptation to go into new categories, like men’s and kids. It’s best to stick to what you know. In spring we’re an event-driven dress and shoe business. In the winter, we become a dress, coat and boot business.
One of the things that’s cost LK Bennett money is the trend away from wearing heels. At, say, the Chelsea Flower Show, a lot of women are wearing dresses, including our dresses, but they are in trainers, which we now do in a small way.
But we are not known for selling trainers, so we will just wait for heels to come back, as they surely will, even if it takes five, 10 or 20 years. That’s what makes the fashion business exciting, isn’t it? It’s not the same stuff every day. There are different opportunities, different issues, different discussions.
How big could LK Bennett be?
In our boom year two years ago, we made £4m EBITDA on £45m sales. So we’re a tiny business, but if we could replicate that every year, Rebecca and her shareholders would see that as a good outcome. I’d be amazed if our business could be a lot bigger than £100 million around the world, with the UK generating about half of that. If I could take £50 million here and make £5m EBITDA every year, I’d say thank you very much.
If we got to £100m making £10m EBITDA, well I’d wish it was my business!
The moment we become too accessible, we lose our reason to exist. Buy one of our silk dresses for a party and you can be pretty sure no one else will be wearing one because I buy 300 of them, not 300,000.
Darren Topp
Who are the key team around you?
Twenty years ago I was ambitious and pushy. Now at 57 I’m the old bloke in the boardroom, still wearing a suit (but without a tie these days)!
I’ve got an amazing management team here. They are mainly young go-getters who’ve made a massive difference. In 2017 I brought in Thomasine Jordan, who’s now our product and design director. She has a lovely eye. Having a really strong design and product team is critical in this whole process and I’m not good at that. It’s not what I do.
We also have Claudia Nappo who looks after stores, online, HR – our COO – who has been here six years.
Jack Wilkinson, who’s our international wholesale and merchandise director, has been here a similar time and has been promoted through the ranks here. Musriq Anjum has worked here three years and has been FD for six months and to complete the senior leadership team we have Mark Havas, who is director for property, IT and legal.
They’re all young, keen, talented, enthusiastic. If my experiences and battle scars can assist them, great.
How does a 35-year-old brand attract young customers?
If I was rating us on a scale of 1 to 10 for overall performance, I’d say we were currently at 6+. There are a lot of things we’re good at but not good enough.
For example, I’m very conscious the perception of the brand can be that it’s white, middle-class, thin women. So that’s why on the website we have models of different ethnicities, different ages, different sizes from petite to curvy.
But also, after 35 years, we are well-known, we have a positive reputation and we are aspirational for many. Recently I saw a young woman in her early 20s trying on some boots in the Bond Street shop. I introduced myself and asked what had brought her in. She explained she was a lawyer, she had just won a promotion at work and she had decided to treat herself to a pair of LK Bennett boots.
That gave me a bit of reassurance. She’s exactly the type of person we want to shop with us.
How will you celebrate the 35th anniversary next year?
We are working on that now. Whatever we do, it will be timed to suit the business. I spent my previous career with Christmas as the peak trading period, but that’s not us. Our peak is March, April and May, when Ascot, Henley, weddings happen. Those three months are absolutely critical to me.
LK Bennett Bond Street
LK Bennett at a glance
2017, when Linda Bennett bought back the company: 49 stores and 64 concessions in the UK, part of 260 stores and concessions in 30 countries.
Today: over 30 stores and concessions in the UK, plus over 20 stores, concessions and franchises in 10 countries. There are 20 LK Bennett stores in China, operated by owner Rebecca Feng.
International partners with online and physical stores include Brown Thomas, De Bijenkorf , El Corte Inglés , Galeries Lafayette, Nordstrom and United Retail (Qatar).
Staff: 300 (UK), 25 (RoI)
50:50 sales split between shops and online
Sales split: Clothing 50% (of which dresses 60%, separates 35, coats 5%), footwear 42% (of which court shoes 70, boots 25%, trainers 5%), accessories 8%.
Financials:
2016-2017: £5.9m loss on sales of £42m
2019-20: £3m loss
2020-21: £0.5m loss
2021-22: £1m net profit
2022-23: Turnover £49m (+30%); Gross profit £30m+ (+40%); Operating profit £2.9m.
2023-24: Will show a loss
70% of sales are from UK and Ireland; 10% Europe, 10% China (wholesale, not retail), 5% US, 5% RoW
